In an effort to minimise disruption to consumers and businesses in Europe, the European Commission has adopted a proposal to allow non-SEPA (Single Euro Payments Area) payments to be accepted for an extra six months.
The deadline for businesses to migrate to the SEPA format still remains 1 February.
SEPA is to provide a common payment processing system across the European Union. Business that do not migrate to the SEPA format will be unable to complete credit transfers or direct debits.
Internal Market and Services Commissioner Michel Barnier said that as of today, migration rates for credit transfers and direct debits are not high enough to ensure a smooth transition to SEPA.
In Ireland, for instance, according to an Irish Small and Medium Enterprises Association survey last month, only 22pc of SMEs were SEPA compliant.
"Therefore, I am proposing an additional transition period of six months for those payment services users who are yet to migrate," Barnier said.
"In practice, this means the deadline for migration remains 1 February 2014 but payments that differ from a SEPA format could continue to be accepted until 1 August 2014."
The transition period will not be extended after 1 August, Barnier emphasised, and he urged businesses that have not yet made the switch to SEPA to do so.
"An efficient single market needs an efficient SEPA," he said. "The entire payments chain – consumers, banks, and businesses – will benefit from SEPA and its cheaper and faster payments. Cross-border payments are no longer exceptional events, which is why an efficient cross-border regime is needed."
The European Commission is urging co-legislators to take up and agree to the six-month extension.